Step 3 Dealing with your priority debts

​Benefit overpayments

You may be told by the Department of Work and Pensions (DWP) that you have been overpaid a benefit, such as Income Support, and that they want you to pay this back. The DWP must tell you if the overpayment can be recovered from you and why. If you do not agree that you owe the money, you can appeal. The law on overpayments is complicated, so before deciding whether to appeal, contact your local advice centre or contact us for advice.

The DWP can make deductions from most types of benefits to collect overpayments. There are maximum weekly amounts that can be taken. If this will cause you hardship, contact the DWP and ask them to take less. Use Your budget and explain why the payments will cause you hardship.

In some circumstances, the DWP will agree to ‘write-off’ the overpayment if your repayments are causing you hardship. Ask your local MSP to help.

If you are not on any benefits, you can treat the overpayment as a non-priority debt.

Dealing with your non-priority debts

Extra advice:

special rules for Housing Benefit and Council Tax Benefit

If your council says you have been overpaid Housing Benefit or Council Tax Benefit, special rules apply. Different rules may also apply if the council say they have overpaid you as part of the Council Tax Reduction scheme. Contact us for advice.

The DWP could take action against you in the sheriff court to get their money back, but there are steps you can take to deal with this. If the DWP threatens to take court action against you, or if you receive any court papers, contact us for advice.


Tax-credit overpayments

In some circumstances, you may be told that you have been overpaid Child Tax Credit or Working Tax Credit. If you do not agree that you have been overpaid, or that the amount is correct, you may be able to appeal. Contact us for advice.

Extra advice:

I cannot afford the repayment

If paying the tax credits back will cause you hardship, you may be able to reduce the rate at which you pay it back. You should speak to HMRC and ask for time to pay it back at a rate you can afford. See their code of practice What happens if we have paid you too much tax credits?. In cases of extreme hardship, or if there is evidence of mental-health problems, they can consider writing off all or part of the debt.

Overpayments can be recovered in different ways, including deductions from your ongoing tax credits claim or your Universal Credit claim, by reducing your tax code or even through the same enforcement methods as a tax debt. In some cases, you can also agree in writing for deductions to be made from your benefits.

HMRC may agree not to recover the overpayment if it is caused by a mistake by them and you have followed the rules for reporting any mistakes you spot and changes in your circumstances. Contact us for advice if you are in this situation.

Household hire purchase or conditional sale

The rules for dealing with hire purchase and conditional sale are usually the same whether they are a business or household priority debt.

Business hire purchase or conditional sale